BSB61015 Advanced Diploma of Leadership and

Management
BSBFIM601 Manage finances
Assessment 1: Prepare budgets
Candidate’s Name Hugo Lima Brasilino

Assessor’s Name Date

Submission Details
This assessment task is to be submitted online by the due date specified by your Trainer/Assessor and
Assessment Plan for this unit of competency. Your assessor must approve any variations to this
arrangement in writing.

Submit a file with the required evidence attached as per

 Specifications below

 Acknowledgement of original work, free from plagiarism as per Assessment Plan

 Special needs (considerations if required see Access & Equity Policy)

 Naming document files when submitting assessments (check Assessment Plan)

 Identifying the Unit, Assessment Number, student name, student number, date and page number
(preferably) in the Footer

 Assessor’s additional and particular instruction/s.

Performance Objective
For this task you are required to respond to a range of prompt questions that examine your
understanding of key legislative and financial management requirements for a case study
organisation. This assessment also requires you to review available financial information and establish
a budget for the organisation.

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Developed by: Nortwest Pty Ltd Approved by: AM Issued: August 2018 Review: August 2019
Task1

Identify the current statutory requirements for tax compliance and list and calculate the tax
Liabilities for Houzit Pty Ltd under taxation legislation.
The statutory requirements are:
Superannuation is 9% of wages and salaries for each quarter
Payroll tax is 4.75% of wages and salaries for each quarter
Workers compensation is 2%of wages and salaries for each quarter
Company tax is 30% of net profit before tax for each quarter
Income tax:436,878
Payroll tax:98,705
Superannuation:187,020
Workers compensation:41,560
Company tax:305,814.9

Liabilities

Current Liabilities

-Mastercard 17,800 14,860

-Trade Creditors 780,000 679,000

-GST Collected 1,455,010 1,571,411

-GST Paid (943,125) (987,626)

-Superannuation Payable 100,000 120,000

-Luxury Car Tax Payable 20,920 -

-Income tax payable 364,795 436,928

-PAYG Withholding payable 65,000 44,872

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Identify the current compliance requirements and liabilities for this organization under the
Corporations Act 2001.
Directors:
Companies must have at least one director of which at least one must be an Australian resident, while
public companies must have at least three directors of which at least two must be Australian
residents.
Secretaries:
Public companies must have at least one Australian resident as Secretary, while there is no company
secretarial requirement for proprietary companies
Registered office:
The registered office must be in Australia and cannot be a Post Office address.
Minute Book and Statutory Registers:
The minute book(s) and statutory registers must be kept in Australia. The statutory registers to be
kept by all Australian companies include Register of Members (shareholders), Register of Option
holders, Register of Charges and Register of Debenture Holders.
Financial reporting:
Public Companies must prepare and file with the Australian Securities and Investments Commission
(ASIC) an audited financial report within four months of the end of each financial year (three months
for a listed public company), except in certain circumstances where relief from this is granted under
certain ASIC Class Orders. Large proprietary companies have to prepare and lodge an audited
financial report within four months of the end of each financial year, except in certain circumstances
where relief from this requirement is granted under certain ASIC Class Orders.
Shareholder details:
Proprietary companies are required to notify ASIC of any changes to its register of members. Thus
shareholder details are on the public record for proprietary companies. Public companies are not
required to notify changes of shareholders (members) to ASIC and so there are no shareholder
records for public companies available at ASIC.
Constitutions: Public companies are required to lodge their constitution or any changes to their
constitutions with ASIC.

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Developed by: Nortwest Pty Ltd Approved by: AM Issued: August 2018 Review: August 2019
Review commercially available financial management software to select the most suitable
software for Houzit Pty Ltd.
Ensure you diagnose software options by comparing two commercially available software
titles against the capabilities of the existing technology for the organization and against the
prioritized requirements, and outline the reasons that lead you to this recommendation.

MYOB:
This business management solutions help you be more productive, which gives more time to build
your venture or to enjoy life outside work.

 Accounting
 Payroll
 Retail point of sale
 CRM
 Job management
 Professional tax solutions
 Websites

XERO:
Small business accounting software that’s not available via the cloud can be tedious. Traditionally, it
can suck up far too much of your business’ time and effort. This doesn't add value, and takes the fun
out of being in business. Cloud software can save your company time and money.
You can use cloud-based software from any device with an internet connection. Online accounting
means small business owners stay connected to their data and their accountants. The software can
integrate with a whole ecosystem of add-ons. It’s scalable, cost effective and easy to use.
In the cloud, there’s no need to install and run applications over a desktop computer. Instead, you pay
for the software by monthly subscription.

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Comparison of above mentioned software to requirements of the organisation is following:

Requirements MYOB XERO

Provide analysis of revenue and expenditure Yes Yes

Manage the company accounts more efficiently No Yes

Compliant with all legislative and statutory requirements for

Yes Yes
small to medium businesses.

Recording GST and completing BAS Yes Yes

Single purchase with no ongoing license fees No No

Multiuser capability Yes Yes

Complete payroll system Yes Yes

Compatible to current computer systems Yes Yes

Based on the above analysis, organisation is recommended to use XERO accounting system for its
business management purposes.

Explain how you can apply the following principles of accounting in developing the budgets
required for this task:
a. Matching principle: This principle states that expenses should be matched against the revenue that
they generate in same time period.
b. Account groups: financial transactions allocated in five account group which are Assets, liability,
Equity, Revenue, Expenses. Assets liability and equity are comes under statement of location and rest
of them comes in report of financial performance.
c. Time periods: This time periods are known as the accounting periods. This period is the period of
time when net income and profit are calculated and reported it can be monthly, quarterly and yearly.

Explain and discuss the implications of probity when preparing and revising budgets.
 Honest Books: Honesty is an ethical principle at the heart of the budgeting process. If the
numbers you crunch don't correspond with your actual business activities, then it is unlikely
that your budget will reflect genuine ethical priorities. If your financial processes are clear,
accurate and transparent, they will provide you with the tools and information necessary to

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 determine the best way to allocate your resources in ways that are consistent with your
company's values. In contrast, fudged numbers are usually the basis for dishonesty and fraud.
 Responsibility: An ethical business organizes its financial house in ways that reflect a deep
understanding of the company's responsibility to a range of stakeholders, from its employees
to its community to the environment. Many business budgeting decisions involve choices
between thoughtfully dealing with the consequences of company policies and earning extra
money by cutting corners. For example, a business that bases its profitability on paying
wages that don't allow workers to adequate support themselves costs the community when
these workers are forced to rely on public assistance.
 Decency: Businesses are run by people, and they sustain themselves financially by meeting
the needs of the people who are their customers. Although the stereotype of a traditional
business reflects an organization geared toward making money at the expense of basic
humanity and decency, ethical companies actually build their bottom lines on principles of
kindness and mutual gain. Ethical budgeting is built on the assumption that treating people
well is worth the money that it costs and ultimately pays for itself by earning the loyalty of
employees and customers.
 Conflicts of Interest: Ethical business budgeting steers clear of situations that involve
conflicts of interest that can lead to dishonest accounting and improper allocation of
resources. A manager who is also a stakeholder with a major vendor may opt to skew the
budgeting process to direct a disproportionate share of the company's purchasing revenue
toward his own endeavor. Similarly, corporate officers who earn tremendous bonuses based
on company profits may prioritize profit over ethical considerations. Ethical budgeting
involves giving decision-making power primarily to people whose financial priorities are
honest and clear.

List the critical dates and initiatives that will require or generate resources for Houzit Pty Ltd
in the next financial cycle.
First quarter: very low requirement
Second quarter: high requirement of resource

 A new car costing $97,466 has been planned for in the coming period to replace the old
vehicle.
 Reduction on the principle of the loan by a payment of $100,000 on the 31 December 2011.
 To reduce the expected gross profit rate by 1% by lowering prices on the products.
 To increase the advertising budget by $70,000 to secure a greater market share. $200,000 is
planned for the first quarter with the balance apportioned equally over the following three
quarters.
 To increase wages and salaries by $172,500 to provide commissions on sales that should help
to maintain Houzit’s sales growth.

List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd.
 Cash flow budget
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  Capital expenditure budget
 Wages and salaries budget
 Fees for training
 Office supplies fee

List of the new or modified internal controls that could improve risk management for Houzit
Pty Ltd including the maintenance of audit trails.
 Authorisation of timesheet by department manager.
 Keep a numbered cash receipts book.
 Using online fee or sequenced cheques for duties paid out.
 Proper coding of shown transactions against suitable general ledger account and cost centre.
 Settlements between company books and third party bank statements are performed

Profit budget
PROJECT BUDGET 2011/2012 Qtr1 Qtr2 Qtr3 Qtr4

Revenue - 20% 24% 26% 30%

Sales 16,971,237 3,394,247 4,073,097 4,412,522 5,091,371

-cost of goods sold 9,673,605 1,934,721 2,321,665 2,515,137 2,902,081

Gross profit 7,297,632 1,459,526 1,751,526 1,897,384 2,189,290

Gross profit% 43% 43% 43% 43%

Expenses

-Accounting fees 10,000 2,500 2,500 2,500 2,500

-Interest expense 84,508 21,127 21,127 21,127 21,127

-Bank charges 1,600 400 400 400 400

-Depreciation 170,000 42,500 42,500 42,500 42,500

-Insurance 13,390 3,348 3,348 3,348 3,348

-Store supplies 3,749 750 900 975 1,125

-Advertising 350,000 200,000 50,000 50,000 50,000

-Cleaning 16,282 3,256 3,908 4,233 4,885

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-Repairs&Maintenance 64,272 16,068 16,068 16,068 16,068

-Rent 2,640,508 660,127 660,127 660,127 660,127

-Telephone 14,997 2,999 3,599 3,899 4,499

-Electricity Expense 26,780 5,356 6,427 6,963 8,034

-Luxury Car Tax 12,000 12,000

-Fringe Benefits Tax 28,000 7,000 7,000 7,000 7,000

-Superannuation 187,020 37,404 44,885 48,625 56,106

-Wages&Salaries 2,078,000 415,600 498,720 540,280 623,400

-payroll tax 98,705 19,741 23,689 25,663 29,612

-workers’ Compensation 41,560 8,312 9,974 10,806 12,468

Total expenses 5,841,371 1,458,488 1,395,172 1,444,514 1,543,197

Net profit(Before Tax) 1,456,261 1,038 356,260 452,871 646,092

Income tax 436,878 311 106,878 135,861 193,828

Net profit 1,019,383 727 249,382 317,009 452,265

Sales budget

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Developed by: Nortwest Pty Ltd Approved by: AM Issued: August 2018 Review: August 2019
SALES 2011/2012 Qtr1 Qtr2 Qtr3 Qtr4

BUDGET Total Budget 20% 24% 26% 30%

Total sales 16,971,237 3,394,247 4,073,097 4,412,522 5,091,371

Detail

Bathroom fittings 30% 5,091,371 1,018,274 1,221929 1,323,756 1,527,411

Bedroom fittings 25% 4,242,371 4,242,371 848,562 1,103,130 1,272,843

Mirrors 15% 2,545,685 509,137 610,965 661,878 763,706

Decorative items 10% 1,697,124 339,425 407,310 441,252 509,137

Lighting fixtures 20% 3,394,247 678,849 814,619 882,504 1,018,274

GST Cashflow analysis

CASH FLOW ANALYSIS-GST 2011/2012 Qtr1 Qtr2 Qtr3 Qtr4

GST Collected 1,697,124 339,425 407,310 441,252 509,137

Less GST Paid 1,281,358 282,913 306,854 326,325 365,267

GST payable 415,765 56,512 100,456 114,927 143,870

AGE Debtors budget

AGE DEBTORS BUDGET Total Qtr1 Qtr2 Qtr3 Qtr4

Sales 16,971,237 3,394,247 4,073,097 4,412,522 5,091,371

%Debtors Sales 20% 20% 20% 20%

Total Debtors 100% 678,849 814,619 882,504 1,018,274

Current 84% 570,234 684,280 741,304 855,350

30Days 10% 67,885 81,462 88,250 101,827

60Days 5% 33,942 40,731 44,125 50,914

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90Days 1% 6,788 8,146 8,825 10,183

Budget notes
Some of the reasons for previous year profits for Houzit Pty Ltd are following:

a) Significant gross profit margins in production and purchase process

b) Tight control over various indirect expenses such as rent, interest expenses etc
c) Significant human resources efficiency leading to tight controls over wages and salaries and other
related expenses
d) Generating consistent growth revenue in the last four years

Existing financial management approaches are not effective due to the following reasons:

 Information regarding new customers not being secured

 Non-effective recording of customer discounts
 Inefficient cash and debtors reconciliation procedures implemented
 Unauthorised overtime amounts in time sheets
 Invoices not effectively being linked with purchase orders
 Cash receipts not being numbered properly.

Assumptions used to create the above-mentioned budgets are following:

 Historical sales performance will continue in the upcoming year

 Expenses are not going to increase more than the economics inflation rate of 4%
 There will not be any significant changes in legislative environment of Australia
 Financial management ineffectiveness will not have significant effects on financial results of
the organisation.

Following are the keys points that must be followed during implementation and monitoring of budget
expenditure:

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  Budget for the area of activity for the full year and profiled for the year to date. When
profiling the budget, planned expenditure patterns should be considered. For certain types of
expenditure (particularly non-staff costs) it is likely that expenditure will peak and trough at
particular points in the year
 Actual expenditure to date
 Future expenditure commitments
 Balance of annual budget remaining. When actual expenditure and commitments together
are compared to the full year budget, this will indicate the balance of budget remaining at the
review point
 Forecast out turn. This is the expected position against budget at the end of the year after
taking into account all anticipated expenditure. The forecast out turn may not be equal to the
original budget
 Analysis and explanation of any positive or negative variances when comparing expenditure
and forecast out turn to budget, together with a documented action plan in order to address
adverse variances

Houzit Pty Ltd has had increased activity of business and sales which is due to increase of services
used in the company’s after-sales service and advertising investment. As a result they have increased
their customer base and built a solid foundation of return customers.
For the new fiscal year, the budget is calculated according to the consumption ratio of previous years.
To increase cash flow; in my opinion management in store should be increased in the store operation
and sales, increase the supervision in the process of using the economic budget expenditure, and
make an account transfer in the connection of the cash flow between the store and the company.

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Developed by: Nortwest Pty Ltd Approved by: AM Issued: August 2018 Review: August 2019